Stalin, Churchill, and Truman—as well as Attlee, who participated alongside Churchill while awaiting the outcome of the 1945 general election, and then replaced Churchill as Prime Minister after the Labour Party's defeat of the Conservatives—gathered to decide how to administer the defeated Nazi Germany, which had agreed to unconditional surrender nine weeks earlier, on 8 May (V-E Day). The goals of the conference also included the establishment of post-war order, peace treaty issues, and countering the effects of the war.

Relationships amongst the leaders

In the five months since the Yalta Conference, a number of changes had taken place which would greatly affect the relationships between the leaders.

1. The Soviet Union was occupying Central and Eastern Europe
By July, the Red Army effectively controlled the Baltic states, Poland, Czechoslovakia, Hungary, Bulgaria and Romania, and fearing a Stalinist take-over, refugees were fleeing from these countries. Stalin had set up a communist government in Poland. He insisted that his control of Eastern Europe was a defensive measure against possible future attacks and claimed that it was a legitimate sphere of Soviet influence.[6]

2. Britain had a new Prime Minister
The results of the British election became known during the conference. As a result of the Labour Party victory over the Conservative Party the leadership changed hands. Consequently, British Prime Minister Clement Attlee assumed leadership following Winston Churchill, whose Soviet policy since the early 1940s had differed considerably from former US President Roosevelt's, with Churchill believing Stalin to be a "devil"-like tyrant leading a vile system.[7]

3. The United States had a new president, and the war was ending
President Roosevelt died on 12 April 1945, and Vice-President Harry Truman assumed the presidency; his succession saw VE Day (Victory in Europe) within a month and VJ Day (Victory in Japan) on the horizon. During the war and in the name of Allied unity, Roosevelt had brushed off warnings of a potential domination by a Stalin dictatorship in part of Europe. He explained that "I just have a hunch that Stalin is not that kind of a man," and reasoned, "I think that if I give him everything I possibly can and ask for nothing from him in return, 'noblesse oblige,' he won't try to annex anything and will work with me for a world of democracy and peace."[8]

While inexperienced in foreign affairs, Truman had closely followed the allied progress of the war. George Lenczowski notes "despite the contrast between his relatively modest background and the international glamour of his aristocratic predecessor, [Truman] had the courage and resolution to reverse the policy that appeared to him naive and dangerous," which was "in contrast to the immediate, often ad hoc moves and solutions dictated by the demands of the war."[9] With the end of the war, the priority of allied unity was replaced with a new challenge, the nature of the relationship between the two emerging superpowers.[9]

Truman became much more suspicious of communist moves than Roosevelt had been, and he became increasingly suspicious of Soviet intentions under Stalin.[9] Truman and his advisers saw Soviet actions in Eastern Europe as aggressive expansionism which was incompatible with the agreements Stalin had committed to at Yalta the previous February. In addition, it was at the Potsdam Conference that Truman became aware of possible complications elsewhere, when Stalin objected to Churchill's proposal for an early Allied withdrawal from Iran, ahead of the schedule agreed at the Tehran Conference. However, the Potsdam Conference marks the first and only time Truman would ever meet Stalin in person.[10][11]

Germany's eastern border was to be shifted westwards to the Oder–Neisse line, effectively reducing Germany in size by approximately 25% compared to its 1937 borders. The territories east of the new border comprised East Prussia, Silesia, West Prussia, and two thirds of Pomerania. These areas were mainly agricultural, with the exception of Upper Silesia which was the second largest centre of German heavy industry.

"Orderly and humane" expulsions of the German populations remaining beyond the new eastern borders of Germany; from Poland, Czechoslovakia and Hungary, but not Yugoslavia.[12]

Agreement on war reparations to the Soviet Union from their zone of occupation in Germany. It was also agreed that 10% of the industrial capacity of the western zones unnecessary for the German peace economy should be transferred to the Soviet Union within 2 years. Stalin proposed and it was accepted that Poland was to be excluded from division of German compensation to be later granted 15% of compensation given to Soviet Union.[citation needed]

Destruction of German industrial war-potential through the destruction or control of all industry with military potential. To this end, all civilian shipyards and aircraft factories were to be dismantled or otherwise destroyed. All production capacity associated with war-potential, such as metals, chemical, machinery etc. were to be reduced to a minimum level which was later determined by the Allied Control Commission. Manufacturing capacity thus made "surplus" was to be dismantled as reparations or otherwise destroyed. All research and international trade was to be controlled. The economy was to be decentralized (decartelization). The economy was also to be reorganized with primary emphasis on agriculture and peaceful domestic industries. In early 1946 agreement was reached on the details of the latter: Germany was to be converted into an agricultural and light industry economy. German exports were to be coal, beer, toys, textiles, etc. — to take the place of the heavy industrial products which formed most of Germany's pre-war exports.[13]

Poland

Poland's old and new borders, 1945. Territory previously part of Germany is identified in pink

Aftermath

Truman had mentioned an unspecified "powerful new weapon" to Stalin during the conference. Towards the end of the conference, Japan was given an ultimatum to surrender (in the name of the United States, Great Britain and China) or meet "prompt and utter destruction", which did not mention the new bomb. Prime minister Kantarō Suzuki did not respond[14] (mokusatsu, which was interpreted as a declaration that the Empire of Japan should ignore the ultimatum). Therefore, the United States dropped atomic bombs on Hiroshima on August 6 and Nagasaki on August 9, 1945. The justification was that both cities were legitimate military targets, to end the war swiftly, and preserve American lives. However, to some the timing has suggested that Truman did not want Stalin involved in the terms of Japan's surrender. It is important to note that Truman delayed the Potsdam Conference in order to be sure of the functionality of this "powerful new weapon."